Correlation Between Ishares Msci and ATMA Participaes

Can any of the company-specific risk be diversified away by investing in both Ishares Msci and ATMA Participaes at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ishares Msci and ATMA Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ishares Msci Brazil and ATMA Participaes SA, you can compare the effects of market volatilities on Ishares Msci and ATMA Participaes and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ishares Msci with a short position of ATMA Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Msci and ATMA Participaes.

Diversification Opportunities for Ishares Msci and ATMA Participaes

-0.25

Correlation Coefficient

Ishares Msci  ATMA Participaes

Very good diversification

The 3 months correlation between Ishares and ATMA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Msci Brazil and ATMA Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMA Participaes and Ishares Msci is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ishares Msci Brazil are associated (or correlated) with ATMA Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATMA Participaes has no effect on the direction of Ishares Msci i.e., Ishares Msci and ATMA Participaes go up and down completely randomly.

Pair Corralation between Ishares Msci and ATMA Participaes

Assuming the 90 days trading horizon Ishares Msci Brazil is expected to under-perform the ATMA Participaes. But the etf apears to be less risky and, when comparing its historical volatility, Ishares Msci Brazil is 2.6 times less risky than ATMA Participaes. The etf trades about -0.23 of its potential returns per unit of risk. The ATMA Participaes SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  137.00  in ATMA Participaes SA on September 3, 2024 and sell it today you would lose (8.00) from holding ATMA Participaes SA or give up 5.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	36.51%
Values	Daily Returns

Ishares Msci Brazil  vs.  ATMA Participaes SA

Ishares Msci Brazil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ishares Msci Brazil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

ATMA Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATMA Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ATMA Participaes is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ishares Msci and ATMA Participaes

The main advantage of trading using opposite Ishares Msci and ATMA Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Msci position performs unexpectedly, ATMA Participaes can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ATMA Participaes will offset losses from the drop in ATMA Participaes' long position.

The idea behind Ishares Msci Brazil and ATMA Participaes SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.